OPINION: Answering claimants' most common questions
Insurance / 29 January 2019, 09:15am / Nthabiseng Moloi
Filing an insurance claim is not something many of us put on our list of New Year’s resolutions. Sadly, however, accidents can and do happen, so if you are faced with the prospect in 2019, it is important that you are armed with all the information you need to make the process as smooth as possible.
By avoiding some of the common pitfalls experienced by claimants in 2018, you will be better positioned to ensure you are fully compensated for any unexpected losses and know which questions to ask your insurer before it is too late.
So, before you set about making your next insurance claim, you would be well advised to familiarise yourself with the answers to these commonly asked questions:
1. I installed a vehicle tracker, so why was my claim rejected on the basis that my car did not meet security requirements?
The important thing to remember is that not all tracking devices are created equal. Certain insurers may insist on specific models, given the variance in functionality. Whereas some track speed, others are optimised to detect impact and others can locate the vehicle. Given the prevalence of theft and hijacking in South Africa, it is important to ensure that your tracking device is always in working order and that it meets the requirements outlined in your specific insurance contract.
2. Why has my contract been cancelled due to multiple claims?
It is important to understand that an insurance contract puts the onus on both parties to fulfill their end of the bargain, with monthly premiums devised as a means to cover the identified level of risk. Multiple claims suggest to the insurer that the level of risk in fact outweighs the feasibility of the contract, which in selected cases can lead to the cancellation of a policy.
3. Why has my contract been cancelled due to non-disclosure?
There are certain cases in which claimants have either given false information with regards to the nature of their loss, or made false statements upfront so as to lower their monthly premiums. Policy cancellation is not something insurers take lightly, but in instances where claimants have been found not to have disclosed vital information or have submitted fraudulent claims, they are at liberty to cancel a policy.
4. What is a regular driver?
In most cases, vehicles are only insured conditionally based on who is driving the car. So for instance, should it be insured to cover a driver over 35, who primarily uses it to get to and from work, the level of risk would be significantly different to that of a 19 year old. So while there is scope for cover in cases where the car has been leant to someone other than the regular driver, if it is found that the car has in fact been driven more often by someone else, the insurance contract will then be rendered null and void. Should you have a car that is operated by multiple drivers on a regular basis, it is important to make provisions for this in your policy at the outset to avoid any issues at the claim stage.
5. Why am I not being paid the settlement amount I was insured for?
The duty of the insurer is to place the insured in the same position in which they would have been prior to an accident or theft. As such, policies seldom provide cover for the purchase price of an insured vehicle, given the depreciation in value thereof. As a result, cars are insured rather for their retail, market or trade values, which are defined as follows:
• ‘Retail’ is the price a vehicle carries on a showroom floor.
• ‘Market’ is the average of trade and retail.
• ‘Trade’ is the price a dealer will pay for your car.
Therefore, it is important to ensure you understand exactly what you are insured for upfront, rather than receiving a nasty surprise when making your claim.
6. Why are parts being replaced with second hand versions?
In any insurance contract, the onus is on the insurer to replace and restore an insured item to the same position it was prior to a loss, rather than enrich. So, should the insured opt to claim for the replacement of a 5-year old engine, the insurer is entitled to settle with a fully-functional second hand engine, provided it is of similar quality.
7. Why were my extras excluded in my settlement amount?
Additional features like mag wheels, music systems and sun roofs need to be specified when taking out the insurance policy, as this increases the value of the vehicle, and in turn, affects monthly premiums. Should you choose not to specifically list these extras, your vehicle will only be insured based on its original form and value, which means any add-ons will not be replaced when it is time to claim.
8. Why do you settle with the bank when a financed vehicle is written off?
It is important to remember that, if your vehicle is currently financed, it is technically still owned by the bank, despite you being the insured party. As such, insurers have a legal obligation to settle an amount with the owner of the vehicle - in this case the bank - before reimbursing the client themselves.
9. Why am I being investigated?
Any claim submitted to insurance must be validated and thoroughly investigated so as to ensure that the loss took place within the bounds of the policy in question. So for instance, you might have been burgled without having activated your alarm system, something that could potentially invalidate your claim if this was a condition stipulated in the initial terms of your contract.
Remember, an insurance policy is a contract between two parties, requiring full disclosure and adherence to the terms if they are to be fulfilled. As such, it is important to understand all the terms of your agreement and to notify your insurer immediately should your circumstances change for any reason.